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Corruption and cross-border investment in emerging markets: Firm-level evidence

  • Javorcik, Beata S.
  • Wei, Shang-Jin

This paper studies the joint impact of corruption on the entry mode and volume of inward foreign direct investment (FDI) using a unique firm-level data set. We find that corruption not only reduces inward FDI, but also shifts the ownership structure towards joint ventures. The latter finding supports the view that corruption increases the value of using a local partner to cut through the bureaucratic maze. However, R&D intensive firms are found to favor sole ownership.

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File URL: http://www.sciencedirect.com/science/article/pii/S0261-5606(09)00008-4
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Article provided by Elsevier in its journal Journal of International Money and Finance.

Volume (Year): 28 (2009)
Issue (Month): 4 (June)
Pages: 605-624

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Handle: RePEc:eee:jimfin:v:28:y:2009:i:4:p:605-624
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/30443

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  19. Shang-Jin Wei, 2000. "Local Corruption and Global Capital Flows," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 31(2), pages 303-354.
  20. Elizabeth Asiedu & Hadi Salehi Esfahani, 2001. "Ownership Structure In Foreign Direct Investment Projects," The Review of Economics and Statistics, MIT Press, vol. 83(4), pages 647-662, November.
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